Page:United States Statutes at Large Volume 120.djvu/1625

 120 STAT. 1594

PUBLIC LAW 109–304—OCT. 6, 2006

insurance or indemnity attributable to an agreement vessel; and ‘‘(4) the receipts from the investment or reinvestment of amounts held in the fund. ‘‘(b) REDUCTIONS FOR LESSEES.—For a lessee, the maximum amount that may be deposited for an agreement vessel under subsection (a)(2) for any period shall be reduced by any amount the owner is required or permitted, under the capital construction fund agreement, to deposit for that period for the vessel under subsection (a)(2). ‘‘§ 53506. Investment and fiduciary requirements ‘‘(a) IN GENERAL.—Amounts in a capital construction fund shall be kept in the depository specified in the agreement and shall be subject to trustee and other fiduciary requirements prescribed by the Secretary. Except as provided in subsection (b), amounts in the fund may be invested only in interest-bearing securities approved by the Secretary. ‘‘(b) STOCK INVESTMENTS.— ‘‘(1) IN GENERAL.—With the approval of the Secretary, an agreed percentage (but not more than 60 percent) of the assets of the fund may be invested in the stock of domestic corporations that— ‘‘(A) is fully listed and registered on an exchange registered with the Securities and Exchange Commission as a national securities exchange; and ‘‘(B) would be acquired by a prudent investor seeking a reasonable income and the preservation of capital. ‘‘(2) PREFERRED STOCK.—The preferred stock of a corporation is deemed to satisfy the requirements of this subsection, even though it may not be registered and listed because it is nonvoting stock, if the common stock of the corporation satisfies the requirements and the preferred stock otherwise would satisfy the requirements. ‘‘(c) MAINTAINING AGREED PERCENTAGE.—If at any time the fair market value of the stock in the fund is more than the agreed percentage of the assets in the fund, any subsequent investment of amounts deposited in the fund, and any subsequent withdrawal from the fund, shall be made in a way that tends to restore the fair market value of the stock to not more than the agreed percentage. ‘‘§ 53507. Nontaxation of deposits ‘‘(a) TAX TREATMENT.—Subject to subsection (b), under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.)— ‘‘(1) taxable income (determined without regard to this chapter and section 7518 of such Code (26 U.S.C. 7518)) for the taxable year shall be reduced by the amount deposited for the taxable year out of amounts referred to in section 53505(a)(1) of this title; ‘‘(2) a gain from a transaction referred to in section 53505(a)(3) of this title shall not be taken into account if an amount equal to the net proceeds (as defined in joint regulations) from the transaction is deposited in the fund; ‘‘(3) the earnings (including gains and losses) from the investment and reinvestment of amounts held in the fund shall not be taken into account;

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